United States v. Real property at 5383 Stonehurst Dr., Martinez, CA ( 2020 )

11 McGREGOR W. SCOTT United States Attorney 22 ANDRE M. ESPINOZA KEVIN C. KHASIGIAN 33 Assistant U.S. Attorney 501 I Street, Suite 10-100 44 Sacramento, CA 95814 Telephone: (916) 554-2700 55 Attorneys for the United States 66 77 88 IN THE UNITED STATES DISTRICT COURT 99 EASTERN DISTRICT OF CALIFORNIA 1100 1111 UNITED STATES OF AMERICA, 2:19-CV-00636-JAM-DB 1122 Plaintiff, UNITED STATES’ REQUEST TO 1133 v. EXTEND THE DEADLINE TO SUBMIT A JOINT STATUS REPORT 1144 REAL PROPERTY LOCATED AT 5383 FROM JANUARY 9, 2020 TO MARCH STONEHURST DRIVE, MARTINEZ, 11, 2020 1155 CALIFORNIA CONTRA COSTA COUNTY, APN: 367-230-018-7, INCLUDING ALL 1166 APPURTENANCES AND IMPROVEMENTS THERETO, et al., 1177 Defendants. 1188 1199 The United States submits the following Request to Extend the Deadline to file a Joint Status 2200 Report from January 9, 2020 to March 11, 2020. 2211 Introduction 2222 On April 15, 2019, the United States filed a civil forfeiture complaint in rem against fourteen real 2233 properties (“In Rem Defendants”) connected to fraud and money laundering crimes in the Eastern 2244 District of California and other areas. All known potential claimants to the In Rem Defendants were 2255 served in a manner consistent with Dusenbery v. United States, 534 U.S. 161, 168 (2002) and the 2266 applicable statutory authority. Furthermore, public notice on the official internet government forfeiture 2277 site, www.forfeiture.gov, began on May 4, 2019, and ran for thirty consecutive days, as required by Rule 11 See ECF No. 4. A Declaration of Publication was filed on July 12, 2019, which set forth, among other 22 items, that publication on the government’s forfeiture website was complete on June 2, 2019. See Dkt. 33 40. 44 This case is related to four other cases filed in the Eastern District of California: two civil cases, 55 United States v. 725 Main Street, Martinez, California, et al., Case 2:19−CV−00247-JAM-DB and 66 United States v. Approximately $6,567,897.50 Seized From CTBC Bank, Account Number 3800191916, 77 et al., Case 2:19-cv-00485-JAM-DB; and two recently filed criminal cases, United States v. Ronald 88 Roach, et al., 2:19-cr-00182-JAM and United States v. Robert Karmann, 2:19-cr-00222-JAM. A notice 99 of related case was also filed this week in another criminal case involving the DC Solar fraud, United 1100 States v. Ryan Guidry, 2:20-cr-00003-KJM.1 1111 The United States has also lodged the complaint on the bankruptcy docket for DC Solar’s parent 1122 company, In re Double Jump Inc., Case 19-bk-50102, a bankruptcy case filed in Reno, Nevada after the 1133 United States executed federal search and seizure warrants at DC Solar’s business and other locations in 1144 California associated with the company and its founders. The United States and the Chapter 7 Trustees 1155 for the entities related to DC Solar and its principals have since entered a Coordination Agreement 1166 concerning the In Rem Defendants and other assets connected to DC Solar and its principals. An order 1177 approving the Coordination Agreement was entered in late November 2019, resulting in the dismissal of 1188 two In Rem Defendants from this case.2 See Dkt. 49, 51. 1199 Good Cause 2200 The United States has provided notice to all potential claimants pursuant to law. Specifically, 2211 the In Rem Defendants are collectively owned by Jeffrey and Paulette Carpoff personally and through 2222 several LLCs, Dora Dog Properties, LLC, Dog Blue Properties, LLC, 475 Channel Road, LLC, 2750 2233 Maxwell Way, LLC, Fou Dog, LLC, Antioch Mini Storage, LLC, and 4021 Pike Lane, LLC. The 2244 government served copies of the complaint documents on the above LLCs through their registered agent 2255 2266 1 The Securities and Exchange Commission (“SEC”) has filed a notice of related cases to relate this case (and others) with their civil enforcement against criminal defendants Ronald Roach and Joe Bayliss, SEC v. Bayliss, et al., Case No. 2:19-CV- 2140-MCE-AC. 2277 11 for service of process, as listed on the California Secretary of State’s website. Further, the government 22 served copies of the complaint on the principals of each respective LLC, Jeffrey and Paulette Carpoff. 33 Lastly, the government has provided notice of this action to the lienholders who are identified on chain- 44 of-title documents and may have a security interest in the In Rem Defendants. 55 Four parties have so far appeared in the case.3 First, the only parties who have asserted an 66 ownership interest, Jeff and Paulette Carpoff, filed claims as to each property in their personal capacity 77 and through their LLCs. See Dkt. 27-28. Second, a bank filed claims concerning outstanding loans as 88 relates to two In Rem Defendants (2750 Maxwell Way and 4021 Pike Lane) being sold by the U.S. 99 Marshals Service, as discussed below. Dkt. 6-7. Third, a construction company filed a claim and 1100 answer associated with labor/materials supplied in connection with retaining walls installed at one of the 1111 In Rem Defendants. Dkt. 37. Lastly, the California Franchise Tax Board (“FTB”) filed a claim to 1122 several of the In Rem Defendants based on alleged taxes owed to the FTB by Jeff and Paulette Carpoff. 1133 Dkt. 35. The FTB and Daysh Development filed answers. 1144 No other party has filed an answer in this case. However, based on the claimants’ requests for 1155 additional time to review the allegations—in the civil complaint as well as the four recently filed 1166 criminal informations and plea agreements—and potential privilege issues and other defenses, and given 1177 the lengthy facts and complicated issues in this case, the United States has agreed to their requests for 1188 more time. The answers are currently due on January 15, 2020. 1199 Furthermore, several potential tax equity investor-victims and those associated with the Dc Solar 2200 tax equity deals have requested extensions of time to file claims in this case. For similar reasons 2211 underlying the agreement to extend the time to file answers, the United States granted each request for 2222 an extension and those entities currently have until January 15, 2020 to file a claim. 2233 To allow the above individuals, entities, investors, and trustees sufficient time to file a claim and 2244 research the issues raised by the facts alleged in the Complaint and recently filed criminal pleadings, the 2255 United States seeks to continue the deadline to file a Joint Status Report from January 9, 2020 to March 2266 11, 2020 (or to another date the Court deems appropriate). 2277 11 Accordingly, there is good cause to extend the deadline to file a joint status report in this case 22 from January 9, 2020 to March 11, 2020, or to a date the Court deems appropriate. 33 U.S. Marshals’ Efforts to Manage and Sell In Rem Defendants 44 2750 Maxwell Way and 4021 Pike Lane 55 As explained in the United States’ application for a restraining order, 2750 Maxwell Way and 66 4021 Pike Lane were purchased using a combination of alleged fraud proceeds and millions of dollars in 77 bank loans, the latter which went into default status some months ago. To preserve the availability 88 equity, the United States requested and this Court ordered, the U.S. Marshals to maintain and sell each 99 property, and the U.S. Marshals started those efforts in following the entry of the May 2019 order. 1100 Particularly, the U.S. Marshals have secured each property, changed the locks and alarm codes, 1111 entered occupancy agreements with existing tenants, and taken other actions to ensure the properties are 1122 safe and properly monitored by professional custodians. The U.S. Marshals have also obtained 1133 appraisals and title reports for each property, designated a point person for any property issues that arise 1144 from tenants and/or other interested parties, and engaged an experienced commercial broker to market 1155 and sell the properties. As to 4021 Pike Lane, several offers were submitted and the strongest offer was 1166 accepted after a subsequent “best and final” round. The property recently sold for approximately 1177 $6,980,000. As to 2750 Maxwell Way, an offer was accepted in July 2019, but that buyer pulled out of 1188 escrow prior to waiving due diligence. The property returned to the market in September 2019 and 1199 recently went into contract with a local owner-user buyer. Escrow is anticipated to close in late January 2200 2020. 2211 2222 Dated: 1/8/2020 McGREGOR W. SCOTT United States Attorney 2233 2244 /s/ Kevin C. Khasigian 2255 ANDRE M. ESPINOZA KEVIN C. KHASIGIAN 2266 Assistant U.S. Attorney 2277 11 ORDER 22 Pursuant to the United States’ request and good cause appearing, the Court makes the following 33 order: 44 The deadline to file a Joint Status Report is extended from January 9, 2020 to March 11, 2020. 55 IT IS SO ORDERED. 66 Dated: 1/8/2020 /s/ John A. Mendez_____________ 77 JOHN A. MENDEZ United States District Court Judge 88 99 1100 1111 1122 1133 1144 1155 1166 1177 1188 1199 2200 2211 2222 2233 2244 2255 2266 2277